Preserving the Value of Voluntary Plastic Action as Packaging Regulation Increases

Extended Producer Responsibility (EPR) is a promising policy instrument to address plastic waste. The goal of EPR systems is to shift the responsibility for end-of-life management of products and materials to the producers.

Conscious companies are not waiting for regulations to be put in place: many are already taking action on their plastic footprints. This article explores how EPR may impact these companies, and makes some recommendations for how they can preserve the value of their existing voluntary efforts.

‍Packaging EPR impacts plastic producers and users

EPR regulations for packaging may involve the introduction of physical and/or financial obligations for companies using plastic (producers, brands, importers, or processors). To encourage circularity, EPR frameworks (sometimes in conjunction with other legislation) may set collection, source reduction, and recycling targets. They may also establish a fee system for factors such as product recyclability or the proportion of recycled material in products.

Obligations on companies can take the form of product or packaging take-back requirements, advance disposal fees, and deposit/refund schemes. In theory, EPR dictates that producers take responsibility for their own packaging waste. However, individual compliance is often neither economically nor practically feasible. Obligated parties are typically enabled to work collectively to fulfil their EPR obligations through Producer Responsibility Organizations (PROs).

Three global EPR trends are impacting plastic users: 

1. Introduction in markets that lack EPR frameworks. In 2022, the US state of California passed EPR legislation that will require producers to join a PRO in 2024 and start paying fees by January 2027. The legislation impacts single-use packaging for all types of materials, as well as plastic food serviceware. Source reduction and recycling rate requirements apply to all covered materials. Three other US states are also implementing new packaging EPR programs with planned implementation in 2025 (Oregon, and Colorado) and 2026 (Maine).
2. Efforts to strengthen existing EPR frameworks to increase impact (e.g., increased recycling targets, stronger deposit-return schemes, and new requirements to promote better material selection through the use of modulated fees). The United Kingdom and the European Union are aiming to strengthen their packaging waste regulations and commitment to more circular approaches. New requirements are expected to be adopted in 2023. 
3. Expansion of the scope of products that are covered under EPR (e.g., textiles). France was the first European country to introduce recycling obligations for textile waste. The European Union will develop harmonized EPR rules for textiles as part of its Circular Economy package in 2023.

EPR frameworks have contributed to waste prevention, can reduce the overall public costs of packaging waste management by requiring producers to pay, and likely have increased rates of recycling in many OECD countries. However, EPR implementation is challenging, owing to the top-down approach and relatively high implementation costs. EPR rules can vary from country to country and sometimes even within national or state boundaries, such as when a city has implemented a ban on certain single-use plastics. Progress toward the goals of EPR frameworks varies very widely. 

‍Corporate experiences of voluntary programs can inform EPR development

Voluntary action to address plastic waste has filled some of the gap created by the inherent delays and difficulty of implementing complex regulations. Corporate finance of waste collection and recycling and commitments to reuse plastic collected from these efforts has benefited local communities and the environment, especially in countries where the plastic leakage problem is severe. Communication of these efforts through third-party product certifications, sustainability reporting, and marketing efforts add brand value by demonstrating tangibly a company’s contributions to sustainability and circularity. 

Companies that are exposed to EPR requirements can continue to play a strong role in supporting the value of the voluntary investments they make abroad in plastic action. Companies that have invested in plastic action can consider how to use their knowledge and experience of voluntary programs to ensure data compatibility with new EPR systems and leverage other lessons learned.  

1. Robust measurement, verification, and monitoring metrics for plastic waste collection and recycling projects already exist, by courtesy of the voluntary market. The generation, retirement, and cancellation of plastic credits from projects that are registered under third-party standards such as the Verra Plastic Waste Reduction Standard is transparent and traceable. Baseline and impact assessment methods such as those developed by Verra are highly relevant in any market that is beginning to design an EPR approach. Aligning data collection as much as possible with existing methods has obvious efficiency benefits.
   
   
2. Plastic credits can simplify administrative burdens. Plastic credits are based on actual collected and processed post-consumer plastic. Advocating to allow an obligated party to invest in plastic credits to meet their obligation for packaging waste collection and recycling could simplify the administrative burden on the entity charged with EPR implementation (the PRO or government agency), thereby lowering compliance costs. An important caveat is that the impact project needs to operate in the same market as the EPR framework. A tradable credit system is in place in the United Kingdom through at least 2026 and can inform regulatory design:
              ---- Packaging Waste Recovery Notes (PRN) are issued by accredited reprocessors to represent the tonnage of packaging waste they have recycled to a required standard. The PRNs are traded and subsequently retired to verify action by obligated parties to meet waste collection and recycling standards set under the UK policy.
              ---- The weaknesses of the PRN system – fluctuating revenue for local authorities, limited growth in reprocessing capacity, and lack of transparency – could be addressed through program design to ensure cost coverage occurs and robust data are provided regularly to all system stakeholders. 
   

• Plastic credits can encourage innovation. Plastic credits can provide a financial incentive to explore whether better packaging design, collection approaches, or end-destinations exist for collected materials – compared to what is mandated by an EPR framework. PROs could establish time-limited incentives using the credit model to encourage source reduction by providing credits for avoided plastic use. For example, the number of “avoidance credits” attributable to the use of a new reuse system could be calculated directly from the total volume of material delivered to the market, based on the weight of the corresponding packaging (such as PET containers) that they replace. Legacy waste clean-up programs (such as those envisioned in the California Plastic Pollution Mitigation Fund) also can benefit from the credit approach, especially since the established methods ensure that only additional plastic is recovered from nature. 

Conscious companies will need more than EPR to achieve their goals

As with any single measure to address plastic waste, EPR systems are not a silver bullet to the plastic waste problem. Producers need to have a robust strategy and incentives to reduce virgin plastic use and achieve their other sustainability goals for packaging in all of the markets where they operate. The growing thicket of varying compliance requirements will surely challenge even the most sophisticated global companies and supply chains. 

• EPR targets may not meet individual brand needs. EPR performance is often driven and measured predominantly by the total rate of recyclable materials collection. Just because something is recyclable does not mean that enough infrastructure is in place locally to ensure a particular polymer is recycled. The EPR system over time will have to collect funds from producers to improve local infrastructure for this purpose. Partly as a consequence of the focus on the total quantity of recycling, EPR-mandated targets may be disconnected from recovery of feedstocks that meet individual brand requirements for feedstock quality and polymer type.
  
  
• Compliance costs and any price signals resulting from regulations may not be adequate to incentivise the producers to deliver the overall packaging policy objectives. Brands (the end market for recycled plastics) typically do not purchase material collected directly by the EPR program. Aggregators, brokers, and reclaimers purchase this material and resell it to packaging producers. The brands purchase converted packaging and specify recycled content from packaging producers. With so many steps between a compliance activity and packaging, product design, and differing business models, demand may be linked only weakly to EPR price signal, especially when supply chains and product markets extend beyond the local or national boundary of an EPR regulation.
  
  
• EPR on its own may not incentivize individual producers to consider all aspects of sustainable packaging design. EPR systems may use a modulated fee structure to either reward or penalize producers according to specific criteria, typically tied to the polymers they use. This may contribute to producers’ decisions to include recycled content, be more recyclable, or use reusable/refillable systems. Policymakers also may enact several regulations simultaneously to address recycled content, source reduction, and recycling targets. These can be relatively blunt instruments that impact only one aspect of packaging sustainability – the amount and types of plastics used.
  
  
• Brands may lose some control over their plastic action narrative. New or expanded waste collection projects have to conduct impact assessments to meet local legislative requirements, where these are in place. However, these assessments may not necessarily require holistic consideration of environmental and social externalities (e.g. environmental emissions, impact on informal workers, best end of life disposal options for non-recyclable waste). Because of their focus on compliance cost, EPR programs may not invest in projects that support recycling of specific polymers or waste types that matter most to a brand. EPR programs may offer incentives to source recycled plastic from the markets where the materials are collected. This post consumer recycled (PCR) plastic may not demonstrate the same rigorous environmental additionality or other social criteria defined in voluntary plastic action programs. 

• Reduced funding for voluntary plastic action is a potential and perhaps unintended consequence of increasing the number of mandatory EPR programs. Voluntary plastic waste reduction projects help fill the urgent need for finance in places that are experiencing high rates of plastic leakage to nature. The potential for reduced voluntary action is, of course, not a reason to stop pursuit of EPR. The combined impact of local regulatory decisions bears consideration, especially by brands with a global footprint and international policymakers. Low-income countries experience disproportionate impacts from plastic waste, and are least equipped to implement their own complicated regulatory programs such as EPR to address it. Sufficient, ongoing and dedicated funding is needed in these countries to build infrastructure and to ensure sustained success of waste management programs. 

So what’s a conscious company to do?

Well-designed EPR policies can spur investment in collection and recycling systems, encourage better design of products, and drive introduction of new business models. But they take time, and we do not have time to wait to act on the plastic waste problem. Companies can get started by:

• Recognizing that managing all aspects of sustainability will get more complicated. A holistic packaging strategy will consider not only waste, but greenhouse gas emissions, waste, and ethical working practices – just to name a few sustainability issues of interest to consumers. Companies can define broad supply envelopes with sustainability objectives that exceed regulatory requirements where needed to deliver customer value and brand promises.
  
  
• Investing differently in voluntary action by considering the portion of their plastic footprint that is not recycled or not covered by regulation. New or tightened EPR requirements at home do not eliminate the pressing need for mobilizing corporate finance to combat plastic pollution globally. EPR schemes may take several years to develop and become fully functional. Plastic credits and use of PCR collected from impact projects provide mechanisms for companies to continue to take action on this important issue.
  
  
• Sharing with regulators the lessons learned from voluntary action. Regulations will only reflect the best practices of the voluntary market with persuasive advocacy by all stakeholders. 

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